ROSH-HA`AYIN, Israel, Aug. 06, 2018 (GLOBE NEWSWIRE) Kornit Digital Ltd. (NASDAQ: KRNT), a leading provider of digital printing solutions for the global printed textile industry, today reported results for the second quarter ended June 30, 2018.

Non-GAAP figures in today’s press release are presented using a different methodology compared to previous periods as a result of comments from the US Securities and Exchange Commission. These changes also impact the Company's guidance methodology. Details of which can be found at the end of today's press release.

Kornit reported second quarter 2018 revenue increased 25.5% to $35.9 million, net of $1.5 million attributed to the non-cash impact of warrants, compared to the prior year period of $28.6 million, net of $1.4 million attributed to the non-cash impact of warrants. Higher revenue in the quarter was attributable to widespread growth across geographies and customers, and the delivery of systems on a large customer program.

GAAP operating income increased to $1.6 million, compared to the prior year period operating loss of $62 thousand. Non-GAAP operating income increased 138.3% to $3.2 million, or 8.8% of revenues, compared to the prior year period of $1.3 million or 4.7% of sales. Increased operating income was the result of increased sales, gross margin expansion, and higher operating leverage as a result of higher sales.

Ronen Samuel, Kornit Digital’s Chief Executive Officer, commented, “I am very pleased with our results for the quarter which included a robust top line growth rate of 25.5% with revenues and operating margins coming in at above the high end of our guidance. These achievements were driven by strong demand for our market leading technology. The recent introduction of the Avalanche HD 6 System with its significant reduction in cost per print, improved hand-feel and improved print quality combined with the continued shift towards print on demand have created excellent business momentum. The retail shift towards shorter run production and the benefits offered by the HD6 are driving migration of more screen printers to our digital solution. To that end, we are well positioned to capture increased growth opportunities as our addressable market expands. Having spent the last 7 weeks on the road meeting customers and employees in all our regions, I was pleased to see the strong business momentum enjoyed by existing and new customers as well as the level of trust and depth of relations our employees have built over the years.”

Second Quarter Results of Operations
Kornit reported second quarter revenues, net of the non-cash impact of warrants, of $35.9 million, compared with the prior-year period level of $28.6 million. The total non-cash impact of the warrants deducted from revenues was $1.5 million in the second quarter of 2018 and $1.4 million in the second quarter of 2017.

On a GAAP basis, second quarter gross profit was $17.4 million, compared with $13.2 million, in the prior-year period. Non-GAAP gross profit in the second quarter was $17.6 million, or 49.2% gross margin compared with $13.3 million, or 46.6% gross margin in the second quarter of 2017. Higher gross margins primarily reflected a favorable product mix compared to the prior year period.

On a GAAP basis, total operating expenses in the second quarter were $15.8 million, compared to $13.2 million in the prior year period. Non-GAAP operating expenses in the second quarter increased to $14.5 million, or 40.3% of revenues, compared to $12.0 million, or 42% of revenues in the prior year period.

Second quarter GAAP research and development expenses were $5.3 million, compared to the prior-year period of $4.6 million. Second quarter non-GAAP research and development expenses were $5.1 million, or 14.2% of revenues, compared to $4.4 million, or 15.3% of revenues in the prior-year period.

Second quarter GAAP selling and marketing expenses were $6.4 million, compared to the prior-year period of $5.3 million. Second quarter non-GAAP selling and marketing expenses were $5.9 million, or 16.3% of revenues, compared to $4.8 million, or 16.8% of revenues in the prior-year period.

Second quarter GAAP general and administrative expenses were $4.0 million, compared to the prior-year period of $3.3 million. Second quarter non-GAAP general and administrative expenses were $3.5 million, or 9.8% of revenues, compared to $2.8 million, or 9.9% of revenues in the prior-year period.

On a GAAP basis, second quarter operating income was $1.6 million, compared to the prior year period operating loss of $62 thousand. Non-GAAP operating income in the second quarter increased to $3.2 million, compared to $1.3 million in the prior year period. As a percent of revenues, Non-GAAP operating margin for the second quarter was 8.8% of revenues, compared with 4.7% of revenues in the second quarter of 2017.

On a GAAP basis, the Company reported net income of $1.8 million, or $0.05 per diluted share, compared to a net income of $0.2 million, in the second quarter of 2017. Non-GAAP net income for the second quarter of 2018 was $3.2 million, or $0.09 per diluted share, compared to net income of $1.5 million, or $0.04 per diluted share in the prior year period.

Balance Sheet and Cash Flow
At June 30, 2018, the Company had cash and marketable securities of $102.7 million, and no long-term debt. Cash flow used in operations for the second quarter of 2018 was $4.9 million, attributable to operation and reduction of inventory.

Third Quarter 2018 Guidance
The Company will discuss the details of its guidance live during its earnings conference call, which will be available for replay via webcast at ir.kornit.com.

Conference Call Information
The Company will host a conference call on the today at 5:00 p.m. ET, or 0:00 a.m. Israel time, to discuss the results, followed by a question and answer session for the investment community.  A live webcast of the call can be accessed at ir.kornit.com. To access the call, participants may dial toll-free at 1-866-548-4713 or +1-323-794-2093. The toll-free Israeli number is 1 80 921 2883. The confirmation code is 8206507.

To listen to a telephonic replay of the conference call, dial toll-free 1-844-512-2921 or +1-412-317-6671 (international) and enter confirmation code 8206507. The telephonic replay will be available beginning at 8:00 p.m. ET on Monday, August 6, 2018, and will last through 11:59 p.m. ET on Monday, August 20, 2018.  The call will also be available for replay via the webcast link on Kornit’s Investor Relations website.

Forward Looking Statements
Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and other U.S. securities laws. Forward-looking statements are characterized by the use of forward-looking terminology such as "will," "expects," "anticipates," "continue," "believes," "should," "intended," "guidance," "preliminary," "future," "planned," or other words. These forward-looking statements include, but are not limited to, statements relating to the company's objectives, plans and strategies, statements of preliminary or projected results of operations or of financial condition and all statements that address activities, events or developments that the company intends, expects, projects, believes or anticipates will or may occur in the future. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. The company has based these forward-looking statements on assumptions and assessments made by its management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Important factors that could cause actual results, developments and business decisions to differ materially from those anticipated in these forward-looking statements include, among other things: our success in developing, introducing and selling new or improved products and product enhancements, our ability to consummate sales to large accounts with multi-system delivery plans, our ability to fill orders for our systems, our ability to continue to increase sales of our systems and ink and consumables, our ability to leverage our global infrastructure build-out, the development of the market for digital textile printing, availability of alternative ink, competition, sales concentration, changes to our relationships with suppliers, our success in marketing, and those factors referred to under "Risk Factors" in the company's Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission on March 30, 2018. Any forward-looking statements in this press release are made as of the date hereof, and the company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Non-GAAP Discussion Disclosure
Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude the impact of share-based compensation expenses, amortization of acquired intangible assets and restructuring expenses and their tax effect. The purpose of such adjustments is to give an indication of our performance exclusive of non-cash charges and other items that are considered by management to be outside of our core operating results. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Furthermore, the non-GAAP measures are regularly used internally to understand, manage and evaluate our business and make operating decisions, and we believe that they are useful to investors as a consistent and comparable measure of the ongoing performance of our business. However, our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Additionally, these non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies.

About Kornit
Kornit Digital (NASDAQ:KRNT) develops, manufactures and markets industrial digital printing technologies for the garment, apparel and textile industries. Kornit delivers complete solutions, including digital printing systems, inks, consumables, software and after-sales support. Leading the digital direct-to-garment printing market with its exclusive eco-friendly NeoPigment printing process, Kornit caters directly to the changing needs of the textile printing value chain. Kornit’s technology enables innovative business models based on web-to-print, on-demand and mass customization concepts. With its immense experience in the direct-to-garment market, Kornit also offers a revolutionary approach to the roll-to-roll textile printing industry: digitally printing with a single ink set onto multiple types of fabric with no additional finishing processes. Founded in 2003, Kornit Digital is a global company, headquartered in Israel with offices in the USA, Europe and Asia Pacific, and serves customers in more than 100 countries worldwide.